On Friday, the 30-share index spurted by 371 points on sharp rise in heavyweight Reliance Industries (RIL), whose stock flared up after the government allowed the company, with some riders, to increase price of its natural gas from April.

The market lost 151 points on Thursday in a knee-jerk reaction to US Federal Reserve's decision to taper its monthly bond buying programme starting next month. It bounced back smartly the next day.

According to brokers, the market had already factored in the much-awaited announcement about stimulus roll-back.

The Sensex resumed steady at 20,714.26, but dropped to 20,568.70 on rise in inflation and fears of hike in interest rates before the December 18 RBI policy meeting.

However, the BSE benchmark index later recovered to 21,117.99 before ending at 21,079.72, showing a smart rise of 364.14 points, or 1.76 per cent, over the last week as RBI unexpectedly decided to keep key policy rates unchanged.

The NSE 50-share Nifty also rose by 105.85 points, or 1.72 per cent, to end the week at 6,274.25.

IT stocks rose as Fed's decision to slow the pace of its bond purchases boosted investor confidence about economic recovery in US, the biggest market for Indian infotech firms.

Shares of healthcare, realty, auto, refinery and power also firmed up on good buying support.

Small and mid-cap shares moved up on renewed demand from retail investors and outperformed the Sensex. Foreign institutional investors bought shares worth a net Rs 6,178.29 crore during the week, as per SEBI's data, including the provisional figure of December 20.

Meanwhile, wholesale price inflation rose to 14-month high of 7.52 per cent in November. According to the government data released last week, retail inflation soared to nine-month high of 11.24 per cent and factory output shrank 1.8 per cent. Jignesh Chaudhary, Head of Research, Veracity Broking Services, said, "Trading started this week on a flat note, tracking the negative growth figures and high inflationary numbers which were released last week.

"The trend continued for the second day also as market came under more selling pressure anticipating rate hike by RBI and Fed's action on the tapering process."

"But surprisingly, despite high inflation, RBI decided not to raise interest rates, giving much needed cheer to the market," he said.

"The market was also supported by strong buying from the FII community. The Nifty is expected to trade in range of 6,263-6,344 and Sensex between 21,167 and 21,243 according to technical indicators," Chaudhary added.

As many as 26 scrips from the Sensex pack ended higher while the four others finished lower.

Major gainers from the Sensex pack were Maruti Suzuki India 6.54 pct followed by BHEL 6.46 pct, Cipla 5.93 pct,